Tuesday, August 12, 2014

What's Your View of the Banking World?

You know it is coming. What are you going to do about it? Is there any doubt that non-
traditional financial service providers and partnerships are aggressively trying to move into the financial services space? Where is your head on this issue? Is it a real threat or not? Will they succeed? As I write this blog, there are over 1,000 venture backed or seeking venture capital companies that are breaking into the payments and financial services space. Why? 

According to Jim Marous, Publisher of Retail Banking Strategies for The Financial Brandthe confluence of the financial crisis of 2008 and the rapid adoption of technology that puts increasing power in the hands of every consumer has resulted in higher demands being placed on financial providers. Today’s consumer expects their bank and credit union to know who they are and how they transact. They also want services built around their spending and wealth-building desires and want to be rewarded for their business.

Banks and credit unions generally are not delivering on these higher expectations of their
members/customers. In this competitive world, when an void is created it is usually quickly filled. Silicon Valley, Boston, London, New York, Atlanta and other financial and tech hubs are breeding  new banking innovations to meet the heightened expectations of of both new and long-term financial service consumers. 

Prominent venture capitalists, and even banks are supporting and funding these new Fintech ventures. Why? Because they perceive a need and an opportunity, filling a void. Fred Wilson one of New York's mostly highly respected venture capitalists and blogger recently said, "financial services disruption is the next huge market to be taken." 

Wal-Mart over many years pushed aggressively into financial services despite failed attempts to obtain a U.S. bank charter that would allow the company to lend money and
offer deposits backed by the Federal Deposit Insurance Corp. The Walmart and American Express joint venture called Blue Bird solved their problem, and is another example of non-traditional and a traditional financial services provider partnering to leverage new opportunities and customers in the financial services market. It started out as simple prepaid cards aimed at tens of millions of middle-class and lower-income Americans eager to avoid fees charged by banks cashing their checks. Less than six months into the partnership Wal-Mart took another leap into the banking world, announcing a prepaid card and debit account with American Express that will give low-income consumers access to features like smartphone deposits. Is this the end or just the beginning of this partnership and others like it into the traditional financial services market space?  

According to a recent study by CGI, the study found that consumers want their bank and credit union to be an integrated part of their daily lives. The five top consumer desires were the following:
  1. Reward Me for my business (81%)
  2. Simplify My Life by providing “anytime, anyplace” access to my balance (61%)
  3. Know Me as a person (58%)
  4. Look Out For Me by providing me with wealth-building advice (55%)
  5. Anticipate My Needs by telling me what I am spending money on and how I can save (52%)

What are your members and customer searching for from your credit union or bank? I can promise you it is not the status quo.  

You have three options: 
  1. Put your head in the sand and hope
  2. You are close to retirement, so it is someone else's problem
  3. Address it head-on by developing and executing a strategy
What's your choice?  

No comments:

Post a Comment